Desperately seeking finance

A new report commissioned by EEDA has revealed that, although private equity finance is perhaps harder to find now, investors are still continuing to invest in suitable companies.

The study, carried out independently for EEDA by Cambridge-based technology consultancy The Generics Group, found that companies with the right proposition are still able to secure private equity funding.

EEDA commissioned the study to get a clear picture of the experiences of regional small and medium sized firms in raising private equity finance, to understand the methods and approaches used. EEDA also wanted to identify possible improvements to the process and the potential benefits to the region.

Although there is a ‘funding gap’ between the upper limit of business angel finance and the lower limit of venture capital finance, experienced companies took this into account and so avoided this barrier by constructing their proposals around market forces.

However, its findings did conclude that inexperienced companies faced the most difficulty with attracting equity and would therefore benefit from access to bespoke advice from experienced individuals in the region.

Key findings revealed that investors used a range of criteria to either reject or accept proposals. Companies that demonstrated a sound understanding of the process and the way it operates found it easier to pitch their proposition successfully.

The main findings from the report “Processes used by SMEs to raise equity finance” show :

Companies that want to raise equity finance should follow ‘best practice’ in the area

Inexperienced companies would benefit from bespoke advice from experienced individuals in the region

Providers of finance continue to invest in suitable companies.

The ‘funding gap’ between business angel and venture capital finance is not hampering access to equity finance for companies that understand the process.

Further research into accessing alternative forms of finance may be beneficial.

For a full copy of the report, please contact Drosten Fisher at The Generics Group, or visit: